Topic: Gold collapsing. Bitcoin UP. - page 1441. (Read 2032272 times)

Gold down, Bitcoin UP.

Pay attention to the bolded sections. Keep your 24 ounces. You'll thank me later.


So you say.

'Rational' does not guarantee 'informed'. If someone were to start trading today without understanding how the financial system works at all, what is rational for that person would likely be naively irrational to an experienced trader. It's the same concern with insider information, wherein the rational decision made by those with said information is different from actions pursued by those without the information.

What's different here is that the insider information has been played on for so long that clues about it have 'leaked' out over the years, allowing for extensive investigation to reproduce the framework of that information. Filling in the details is a simple matter from that point.

I hope this visual helps with further explanation below.



The relational values are my educated guess as to how each of several different types of value apply to each of the assets presented. Subjective is obviously from the subjective theory of value, just as intrinsic infers the intrinsic theory of value. Production value is the input cost, or the labor theory of value.

Producing a dollar requires almost no effort, and the more produced, the lower the overall cost. This is especially true when considering what it is used for. Its intrinsic value is negligible at best, being mere fabric and ink. The value is almost entirely subjective.

Gold has a much greater production cost, making its initial market price alone much higher. If its minor intrinsic value for use in industry and research were the only determinant, the total value would be much less. Speculation rests mostly in the subjective value region (also when ratio shifts occur), which is not very big in comparison to the sheer cost to produce it. This is why large price swings can't do much to keep the exchange value low. It is also why, no matter how much naked shorting pressure is exerted, it will always have value. This is particularly important as gold regains a greater monetary role.

* Paper gold is equivalent to the dollar: negligible production cost and intrinsic value resulting in purely subjective value, easily dominated by speculation. It is not gold.

Bitcoin is interesting, because any of its purely abstract, mathematical units basically has zero intrinsic value. The production cost includes the hardware and energy required to secure the blockchain, and that maybe amounts to half of the current market rate if considering GPUs only. That probably drops to as little as 10-20% when including FPGAs. All that's really left after hardware and energy input is subjective, involving speculation and practical usage demand.

None of these valuations take into account supporting infrastructure outside of creating the initial availability for each unit. That would change the ratios, in some situations drastically. For instance, the USD requires expansive and pervasive infrastructure both to secure and manage its units. Gold doesn't need much infrastructure at all, since each unit of gold can generally be judged by appearances. Bitcoin infrastructure lies somewhere in between, needing more active components than gold, but being much less expensive than that necessary for the USD.

The absolute values in terms of different units (XAU, USD, BTC) shows a different picture, one that is incapable of delineating the separation between the above types of value.



When calculating 'price', the denominational unit simply acts as the proxy between whatever items are being exchanged. Therefore, a medium of exchange is virtually inconsequential except to provide a reference point. I could compare the price of dollars to the price of gold in terms of bitcoins, or the price of corn to the price of bonds in terms of gold. The absolute value cannot break down the types of value combined within an item.

Some traders and investors seem to have an instinctual understanding of these concepts, but I have yet to come across any texts which explicitly outline the interplay between different types of value.

i'm not offering a bargain price?  why not?  i thought you said gold was going to the moon or a fully fiat valued $35,000?  $2800 is clearly a bargain given that metric.  or perhaps you really don't believe what you're saying do you?

if not $2800, then what IS a bargain price?  might it be......wait for it........$1575?  will you buy from me at that price?  but, but that's the PAPER price!  i'll be damned.  that's what i can buy it for down at the local coin shop.  i'll bet you won't even buy from me at that price.

and if you think that's a bargain price then why wouldn't every other rational actor in the market place agree with you?  or perhaps they do?  but then that's a problem too b/c then what does that do to your theory?

answer:  the theory is BS.

How's this: 1 troy ounce of gold is worth 1 troy ounce of gold. Value needs to be measured in a consistent medium. The USD is not remotely consistent. Transparency is critical as well, and gold is far more transparent than paper, except when obscured by that paper.

Gold is only volatile in terms of fiat. It is stable within a consistent range relative to real assets. The problem is in the financial system, not gold and real assets.

If I were to take a loan, I would buy at the best bargain I could obtain. You aren't offering that.

Historical volatility extremes are indicative of either accelerating growth or failure. Either gold or the financial system are failing, not both. Look around at the banking crises (plural) and tell me it's gold that's failing.

Playing the paper game doesn't require any more luck than card counting at a casino. It's knowing when the casino can't pay out that's important. I'd rather be early than lucky - you can try to catch the last corner.

there you go again.  "the price is not real."  then what is real?  what's the true price right now?

i keep offering you 22 oz at a bargain price of $2800 each which is a bargain if you truly believe they are going to $35,000 each.  why won't you take me up on them?  take out a loan.

Maybe you forgot that I don't advocate trading in traditional markets for that reason. As soon as a breakout begins, the weight of the entire financial system is brought to bear on real assets. Financial paper "assets" drown perceived value until we arrive at sentiment like there is now. Last September, gold related assets were a reasonable bargain. Now, they're being thrown away.

The paper depiction of value in regard to real assets does not describe their actual worth. You might as well tell me that a 70kg adult male only needs 1ml of water and 5g of rice per day. Try to do that in reality and he'll die within a fortnight. Dumping gold and related shares at current valuation is like giving away Bentleys because you don't like the style.

Keep playing the paper game. You can move your legs as fast as you can, and it might een seem like you're getting somewhere, but you're still standing in quicksand.

i just wanted to point something out.  the move down in May, 19/23 days straight down, was a move not seen since 1972 (quote Bill Fleckenstein podcast interview, FSO or KWN interview).  that's 40 f*ckin years.

now how the hell does Cypher get that lucky?

edit: btw, my subs know exactly how i did it as i walked them thru the logic step by step.

what the hell are u talking about?  she was probably listening to your bullshit here at the top:


https://bitcointalksearch.org/topic/m.522374

I don't have to worry - I'm not mistaken. It's simple: paper gold can go to zero, but physical gold cannot. The same applies to all real assets.

Anecdotes do not change the fundamentals. No amount of 'crying ladies' paraded as intentional misinformation can either. With their lack of understanding that their 'losses' are unrealized, and often accompanied by a confusion about why the investment was undertaken in the first place if it was even entered for the right reasons, people sadly succumb to their own ignorance of the financial system.

It's amusing to hear people saying that gold holders will become millionaires when that status is relative - sure, you might become a millionaire, but a millionaire in 2020 who lives the same as an average middle class wage earner of ~$50,000 in 2010 is not necessarily someone who is financially 'rich'. It's simply someone who hasn't had to chase corners and trade their way to maintaining the same lifestyle he has now.

You can earn all you want in paper, but when the time comes to revalue assets, paper will be drawing the short straw. It's the same thing as being in the wrong asset when the Russel index is rebalanced every year. All of your gains could easily amount to the equivalent of treading water, or drowning.

It has to be said again:

nothing's noted unless one of you guys go on record yourselves and make some commitments like i have so i can call you wrong as well.  what do you think this is, a one way street?

i just heard some lady crying (literally) on an interview with Jim Puplava on how she's lost $100,000 on mining stocks since the top.  of course he said "hang on, you're closer to a bottom than a top".  it's irresponsible advice like this from guys like you that have cost alot of ppl alot of money.

As zerohedge crowd have been absolutely correctly commenting on recently. Prices of equities and bonds and many other asset classes do not trade based on fundamentals but based on current level of central bank insanity.

Dow, for example, these days has nothing to do with number of cars, potash, iphones or CPU's or other goods and services produced and consumed. It has, however, everything do to with and only with how much QE Ben and Marv have pushed out of their wasoo during every given week. Trade that. Or alternatively, just buy some bitcoins and you can start ignoring reality for the next decade or so.  

That trend has been repeatedly rebuffed and also shows signs of slowing into a reversal.


Noted. Since you stated with an or, I assume that a collapsing Dow and rising gold would meet that measure.

The bears are still expecting people to stop eating, and machinery to run on air.

i'm pretty sure everyone here knows i'm patiently waiting for the Bitcoin rocket.

i'm also patiently waiting for gold/silver/miners to make new lows along with the stock market.  patient i am.

Patience? I didn't think you were interested in longer term investments that you need to wait for. Everyone long gold is also waiting. We will see... At the moment it's just boring. *yawn*

i am not wrong yet.  just look at the seesaw at the top in 2007-8.  i went short in Sept 07 approx and it was painful for a while but look what eventually happened.  you've got to be patient, and yes, collapse or crashes take time.  i wouldn't advise trying to ride this one out.

lol You called for a CRASH in the stock market.  I want to see 7k dow.  You called for a COLLAPSE of gold with a target of 400.  I want to see 800 gold by the end of the year.

If I see those, I'll say you were right, we had a stock market CRASH and a COLLAPSE in gold.

You have got the direction right for the last 3-4 months, but the magnitude is WAY off .  More power to you for making money on a minor pullback, I personally just think its VERY risky, because things can turn fast, and you can get caught with your pants down.  Especially with triple leverage and shorts..

It could downtrend for the rest of the year, I don't see it. I think something will catalyze the market and we will have a nice 2nd half or last quarter of 2012, but I could be wrong.

how bout this?  i will admit i'm wrong if the Dow gets back up over the 5/1/12 high or gold gets back up over the 2/28/12 high by the end of the year.

you make a similar commitment.  you'll notice, btw, that i've made realistic targets that are reasonably easy to reach for you to call me wrong.

why don't you commit to something like gold won't go below 1523 or that silver won't go below the December low of 26.14 by the end of the year?  or that the Dow won't go below the 6/4/12 low?

Overall?  I'm way up.. I been buying miners since 2003ish.. Started with copper miners, but have bought a bunch of other ones over the years.  The dips I've bought in the last year or so?  I don't know, maybe 20-30% down.

just go with the statistics above, man.  how far again are you down on your miners?